Dr. Thomas Kemp, department chair of business on NW Campus, shares his advice on the importance of building credit as a student and ways to do it.

Q: Why is it important for students to start building their own credit?
Many students do not have credit in their name and will need credit at some point in the near future. It may be their first car, home or even application for a job that good credit history is needed. Without a credit history you can be denied a loan and in some instances may not qualify for a job if the company runs a background security check that includes a credit report.

Q: Where can students go to start their credit-building process?
Today most banks have an asset/trust or financial planner officer to work with clients on starting a financial plan. Students can go to most brokerage houses and receive financial planning advice if they open an account with them. Students need to be sure they ask for the individual’s credentials. I prefer someone who does not have to sell a product to keep his job and is employed by a reputable employer who can substantiate the planner’s credentials.

Q: What about student credit cards?
I surprise a lot of students and people in my generation with my answer but I tell my students they should have one. In today’s society, people can hardly function without a credit card, and one way to build credit is to have a credit card. Trying to take a trip and book an airline ticket or rent a car without a credit card will not happen. I do caution students that a credit card is not money and that it should be used only in limited situations. Purchases by a credit card should be made only when the purchase is an extreme emergency or the money to repay the purchase is available at the end of the month. Do not get in the habit of carrying over extended balances and paying only a portion of the interest and balance. Doing so will dig a hole you cannot get out of and will ruin your credit score quickly.

Q: What are recommended ways to build credit as a student?
• Opening a checking account at a bank and keeping the account for several years with no non-sufficient funds charges. This will show that someone can balance and maintain a checking account without writing “hot checks.”
• Starting a savings account and trying to build some personal wealth.
• Obtaining a quality credit card possibly through a bank that has a low interest rate and no fees without any outrageous late fees or charges.
• Using a credit card sparingly, just enough to keep it active to purchase items that can be paid off on the monthly billing cycle.

Q: What are credit scores?
Credit scores are best explained by the following excerpt taken directly from Yahoo’s finance Web page which is a good information site:
“ Your credit score is a number, calculated based on information in your credit report, that lenders use to assess the credit risk you pose and the interest rate they will offer you if they agree to lend you money. Most lenders use credit scores rather than credit reports since the scores reduce extensive, detailed information about your financial history to a single number. It may be a good idea to review your score if you anticipate applying for a major loan, such as a mortgage, in the next six months to a year. That allows time to bring your score up if you fear it’s too low.”

Q: What would be your best advice to keep a high credit score?
I would advise students to check on their credit report by calling 877-322-8228. The three big credit reporting agencies are now required by law to give out a copy to the person who is requesting his credit report. The credit score is just a summary, but what goes into someone’s credit report is up to an individual to keep track of it. With the actual technology of electronic transfer of information, it is possible for someone to make a mistake and send wrong information to the credit report. Also if someone is a victim of identity theft, for example social security number, driver’s license number, bank account number, or any credit card, that could ruin their credit rating. If the information is wrong, people should challenge it and get it corrected. As wrong as that may seem, it is a reality. People should not have to pay someone to correct their credit history. If they are capable of proving what you know and able to write and communicate, then they can challenge the credit reporting agencies.